China's strategy towards Papua New Guinea - Engaging the nation for its resources

The country very much acts as a bridge between Asia and the Pacific, which makes it very important from the geopolitical point of view. The country has always been tossed around by various powers at different times. During the colonial age, the country was occupied by various European powers, namely Dutch, British, and later by Germans. Later on, Australian forces took over the control of the island as mandated by the League of Nations and later on by the United Nations. The country finally became independent in 1975 and is a constitutional monarchy, with Prime Minister as the head of the state and Queen Elizabeth II as its monarch.

Papua New Guinea is a major exporter of commodities and runs a trade surplus with most of the partner nations. It mainly exports, “coffee, gold, oil, cocoa, vegetable oils, fish, copper and wood. Papua New Guinea imports mainly consist of fuel, rice, vehicles, heavy machinery, meat, iron and steel, and other furnished goods”. PNG's main trading partners are “Australia, Japan, China, the United States, Singapore and the Netherlands”. Apart from trade, the resource-rich nation maintains close ties and cooperative relations with Australia and other traditional allies like China, New Zealand, Japan, India etc.

PNG was in news recently due to its greater proximity with the Chinese. PNG is of great importance to China due to its strategic location in the pacific and close proximity with Australia. In the Pacific island region, the country is in a leading position in jointly building the Belt and Road Initiative.

PNG relations with China

Soon after the independence of Papua New Guinea, China (PRC) established official diplomatic relations in 1976. The two countries currently maintain economic, diplomatic and, to a certain degree, military relations as well. China is a strategic partner and provides both investments and developmental aid to PNG. The cooperation between PNG and China extends in the areas like business, energy, resources, healthcare, education, communication etc.

The trade between PNG and China stood roughly at $3 billion for the year 2018. The bilateral trade includes the export of primary goods like wood, organic chemicals, rubber, nickel, copper, iron, gold, coffee, cocoa etc to China. The island country maintains an overall trade surplus with China.

China has been steadily investing in the country and has invested in various sectors like mining, communication, technology, networking and others. China has also tried to lure the country with its soft power initiatives which include the development of Integrated Government Information Network, construction of student dormitories project at the University of Garoka, medical aid and others. Chinese state-owned China Construction Steel Structure Corporation, the largest construction company in the world has constructed Butuka Academy in PNG's capital, Port Moresby which is considered as a step forward in the cooperative direction as the country lacks good educational institutions in the country. The development and expansion of China’s soft power were also welcomed by the local groups.

Chinese first resource investment in PNG was in Ramu Nickel-Cobalt mine project worth $2 billion, which was jointly developed by the China Metallurgical Group Corporation (MCC) and Papua New Guinea. This project faced a lot of issues and resentment in almost all the phases of development. In the beginning, the operations were delayed due to the resistance of landowners against the dumping of waste into the sea. There were clashes between the local groups and the Chinese employees in 2012. Later in 2014, the locals also attacked the project site, causing injuries to the staff members leading to the death of a Chinese worker and also causing damage to the property. Due to this, the mine was closed for some time. In 2019, the mine again gained headlines due to the toxic slurry leakage which raised concern over the environmental sustainability of the plant.

Similarly, the Chinese investment in the Porgera gold mine, which is located in the northern PNG highlands, and among the world’s ten largest gold mines in the world, is also under question, as the PNG has nationalised the gold mine in 2019 and did not extend the lease further. The mine was jointly held by the Chinese Zijin Mining Group Co. Ltd. and Canadian Barrick Gold Corporation, which applied for a 20-year extension of the leaseback in 2017, two years before the lease’s expiry. In the recent ruling, a court in Papua New Guinea also dismissed the application by Barrick Niugini Limited (BNL) and upheld the decision of government by not extending the lease of the Porgera gold mine to the joint venture.

Adding to the recent wave of Anti-Chinese sentiments, in August 2020, the defence forces of Papua New Guinea intercepted an unregistered Chinese ship which was illegally operating in PNG waters near the strategically located Manus Island. It is to be noted that the US and Australia are developing the Lombrum Naval Base here. Various sources suggest that members of the Chinese vessel were detained and some underwent the treatment also in a nearby General Hospital in PNG after receiving gunshot wounds.

Though the Chinese aid and infrastructure projects in PNG was welcomed by the locals and the government, the Chinese experience from both the mining projects has not been encouraging. The country is home to a number of ethnic groups, which oppose the interference in their culture and dominance over the natural resources. The issues of the locals range from the acquisition of land, non- involvement of locals in the profit-making companies, environmental pollution, and climate change creating the negative impact on fisheries and agricultural activities. The Chinese investors have faced challenges like corruption, governance issues, opposition from the locals, lack of infrastructure and others.

The concerns of the US, Australia and Japan:

PNG has long-standing relations with Australia. Both the countries share historical ties along with the shared economic interests and common legal framework. The relationship between the two countries took a leap forward when both the countries signed the Comprehensive Strategic and Economic Partnership in 2020. Australia has been working towards the promotion of governance and economic growth along with enhancing human development. Australia has also been actively providing economic aid for various development projects in PNG, and is its largest trading partner. For the year 2019-20, the Official Development Assistance (ODA) from Canberra to Port Moresby stood at $607.5 million.

PNG also maintains cordial relations with the US and also enjoys a close friendship with it. The US also has been extensively working in the country in the field of environmental security, improvement of public health, economic empowerment, infrastructure development and education. The US has also been providing economic aid and assistance to PNG on various occasions to empower the country to fight various natural disasters and calamities.

The Japanese also enjoy friendly and cooperative relations at the diplomatic level with PNG. PNG is currently the largest recipient of Japan's aid among the Pacific island countries. Japan International Cooperation Agency (JICA) provides assistance to Papua New Guinea to achieve economic growth, improving the social service sector, and in the field of environment and climate change.

The military of both Australia and the US have a cooperative security assistance relationship focusing upon mainly on joint humanitarian exercises and the training of Papua New Guinean military personnel. The two countries are also jointly developing the deep-water Lombrum naval base at PNG’s Manus Island, which will increase the maritime capabilities of both the nations in the Pacific region. After the completion of the project, the Lombrum naval base will be the second American military base in the region after Guam which would be outside the “first island “chain that extends from Japan to the Philippines and Indonesia. The chain efficiently encircles Chinese in its own backyard thereby reducing its footprints in the Pacific region. Also, the Lombrum Naval base will be outside the striking capabilities of the Chinese armed forces (PLA), which would make the operations for the US, Australia and Japan beyond its reach.

Way-Forward

With the shifting of power centre from the Atlantic Ocean to the Pacific Ocean in recent times has enabled PNG to be at the centre-stage among all the powers in the region. This has added to the strategic importance of the country. Apart from the plethora of natural resources which PNG holds, the geopolitical importance attached with it probably outweighs all the other factors. The growing footprints of China in the country has alarmed the traditional powers and stakeholders in the region to fight for their existing hold and control. Moreover, Canberra is the major player in the region and the increasing presence of Beijing in its backyard has raised the concerns of the Australian policymakers. Though, in the recent times, it seems that the country has been growing anti-Chinese sentiments, it is more likely that with the change in leadership, the Chinese again would be able to gain the momentum in the country as it has all the rights to pursue investments in the region and PNG is also entitled to diversify its relations.

Notes

1.       https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/bmdyzs_664814/gjlb_664818/3417_664890/3419_664894/t1779097.shtml

2.     https://www.earthworks.org/blog/why-did-a-norwegian-firm-ditch-a-chinese-company-over-what-its-doing-in-papua-new-guinea/

3.      https://postcourier.com.pg/gas-sales-drive-china-trade-in-pngs-favour/

4.     https://asia.nikkei.com/Spotlight/Caixin/In-Depth-How-Chinese-miner-lost-Pacific-Island-gold-mine-rights

5.     https://www.smh.com.au/world/asia/how-a-school-in-australia-s-closest-neighbour-became-a-diplomatic-weapon-for-china-20200811-p55kqj.html

6.     https://www.state.gov/u-s-relations-with-papua-new-guinea/

Pic courtesy-Bob Brewer at unsplash.com

(The views expressed are personal.)